India

On Income Tax radar: Former MP Jay Panda's Bahamas transactions

The Income Tax department has received a complaint alleging money laundering and tax evasion by former Biju Janata Dal MP and Odisha industrialist Baijayant Jay Panda, his wife and associates.

The complaint received in January claimed that Panda, his wife Jagi Mangat Panda and “their close associate” Manjula Devi Shroff “committed offences under the Prevention of Money Laundering Act, the Black Money Act, the Income-Tax Act etc by using shell companies” to bring in at least Rs 17.72 crore “without any known source from outside India” and then transfer the “shares obtained in lieu of these foreign investments to entities held by Panda and his wife at negligible price.”

When contacted, Baijayant Panda and Manjula Devi Shroff denied any wrongdoing. In an email, Panda said, “The transactions you refer to include those which are well over two decades old. To the best of my knowledge, they met the prevailing regulatory norms and had the requisite approvals.” Shroff said, “As a power of attorney holder, I have had no control over the entities that you mention nor have I been the beneficiary of any of the transactions.”

The companies, Finlay Corporation Limited, Messina Corporation Limited and Pikika Limited, were incorporated in the Caribbean tax haven figured in the Bahamas Leaks expose reported by The Indian Express with the International Consortium of Investigative Journalists (ICIJ) in 2016.

According to the records of the Bahamas registrar of companies, Finlay, Messina and Pikika were incorporated in June 1993, January 1995 and March 2003 respectively by agent Corporate Services International Limited at the same address in Nassau, Bahamas, with proxy office bearers.

Records show that Manjula Devi Shroff, identified at her Delhi address, held the power of attorney for Finlay and Messina since July 1994 and January 1995, respectively. From an erstwhile royal family of Odisha, Manjula Devi Shroff is CEO of Kalorex Group that runs schools in Gujarat. She is on the board of Kishangarh Environmental Development Action Pvt Ltd and Odisha Television Ltd along with Jagi Mangat Panda.

She was also a director, along with Baijayant Panda and Jagi Mangat Panda, of Ortel Communication Limited, a regional cable and broadband services provider, from 1998 till 2013. The company is currently under the corporate insolvency resolution process.

Between 1995 and 2007, the three Bahamas companies Finlay, Messina and Pikika invested – directly and through their India subsidiaries MS Telecom Ltd and Calorex Holdings Private Ltd – in Ortel a total of Rs 17.72 crore not only in equity but also in preference shares and by extending loans. Manjula Devi Shroff was a director in both MS Telecom and Calorex.

The Panda family picked up the Ortel equity shares acquired for Rs 9.46 crore by the three Bahamas entities and their two Indian subsidiaries through the family-owed Panda Investments Private Limited and Metro Skynet Limited at almost one-sixth the cost of acquisition for Rs 1.68 crore in cash.

Further, all preference shares held by Finlay were allotted in December 2010 to Odisha Television Limited where Manjula Devi Shroff and Jagi Mangat Panda are directors.

Pikika was dissolved in July 2011 and Messina in February 2013. Finlay folded up in March 2018. and yet the company’s 96.13% shareholding in and the Rs 2.03 crore loan it advanced to MS Telecom appeared in the latter’s 2017-18 annual return.